Morgan Stanley opts to move EU base to Frankfurt

Thursday, July 20, 2017

Morgan Stanley has chosen Frankfurt to be a new base for its European Union operations as the UK prepares to leave the bloc, according to a source familiar with the matter, becoming the latest US bank to pick the German city.

International banks are planning to set up subsidiaries in the EU to ensure they can continue to serve clients if their London operations lose the ability to operate in the EU after the UK leaves in March 2019.

Morgan Stanley is planning to use its Frankfurt subsidiary as the centre for its EU trading operations, according to the source.

“That means 200 new people will be coming to Frankfurt,” the source said.

However, the bank is likely to spread some of its operations across the EU, with its asset management business expected to go to Dublin. That pattern is likely to be followed by many banks — picking one EU centre to be their main regional subsidiary in the bloc but then locating other parts of their businesses in several countries.

The firm plans to relocate some of its European broker-dealer business to the German city from London, while moving parts of its asset management operations to Dublin, said one person.

About 300 jobs will transfer to various cities across Europe, including Paris, with around 200 going to Frankfurt, the person said.

Frankfurt has emerged as the biggest winner in the fight for thousands of London-based jobs that will have to shift to new hubs inside the EU in preparation for the UK’s exit. Standard Chartered Plc and Nomura Holdings are among lenders that have already picked the city for their new EU base. Like Morgan Stanley, most banks are likely to opt for a model that spreads jobs across multiple countries.

Frankfurt, Germany’s financial centre, offers proximity to the European Central Bank, which supervises EU banks and sets monetary policy for countries that use the euro.

The location also provides access to the bloc’s most populous country and its biggest economy. London could lose 10,000 banking jobs as a result of Brexit, think-tank Bruegel estimated earlier this year.

The lobby group Frankfurt Main Finance is predicting Frankfurt could win 10,000 jobs.